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ADB forecasts China GDP to grow 9.6% in 2010

2010-04-13 17:15 BJT

MANILA, April 13 (Xinhua) -- The Asian Development Bank forecasts that the People's Republic of China's economy will expand 9.6 percent this year thanks to the huge fiscal and monetary stimulus.

These measures cushioned the global recession's impact on the Chinese economy allowing it to post a V-shaped recovery in 2009, with growth coming in at 8.7 percent for the year, according to ADB's flagship annual economic publication, Asian Development Outlook 2010 (ADO 2010), released Tuesday.

The same measures will continue to support the Chinese economy this year. But as the government tightens expansionary policies, the ADB expects China's GDP growth to moderate at 9.1 percent in 2011.

"Signs of rising inflation, higher asset prices, and returning foreign capital flows, will see the government adopt a more cautious approach, with the pace of bank loan expansion for public investments to be pared back," the ADB said.

The Manila-based lender expects China's export sector to rebound this year as the global economy recovers. But the ADB notes that exports to industrialized countries may not revert to its pre-crisis levels anytime soon. This is why it's important for China to boost private consumption and expand the services sector to sustain growth in the next few years.

"The global recession and expected modest recovery in industrial countries have reduced the potential for exports to be a major driver of growth, and while fiscal and monetary stimulus measures have acted as a substitute in the short-term, sustaining growth in the longer term will require robust private demand," ADB Chief Economist Jong-Wha Lee said in a statement.

Lee added that China's economic planners should watch out for rising inflation pressures in consumer and asset prices, and should implement regulatory intervention as needed.

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Editor: Du Xiaodan | Source: Xinhua